Netflix shares continue to trade in a bull market as investors wait for Q4 results

Netflix (NASDAQ: NFLX) shares have been moving in an uptrend last several months, and according to technical analysis, there is no risk of the bear market for now. Citigroup raised its price target on Netflix to $580, and the focus of investors is on Q4 results that will be released on Jan. 19.

Fundamental analysis: The focus of investors is on Netflix Q4 results

Netflix shares have weakened more than 7% since the beginning of 2021 year, and the risk of additional declines is not over yet. Many analysts agree that the US stock market could enter a correction phase that could add further pressure on Netflix shares.

Netflix usage showed signs of slowing down in North America, and average monthly visitors fell in the U.S./Canada to 57.9M in December. Despite this, Citigroup raised its price target on Netflix to $580 from $450 as the company continue to dominate on both original TV series and acquired TV series.

It is also important to say that the analyst firm Cowen raised its price target on Netflix to $650 from $625 on optimism about the company's fiscal fourth quarter. Netflix will report Q4 results on Jan. 19, and the market expects good subscriber numbers, with seasonal strength bolstered by ongoing shutdowns.

Netflix has an excellent position in the market, but the current share price does not provide an attractive entry point for long-term investors, in my opinion. Netflix's future cash flows have already been priced into the valuation of its shares, and with a $220B market capitalization, this company remains expensive.

The focus of investors is on Netflix's Q4 results, and if sales, earnings, and cash flow expansion fails to materialize as forecasted, the share price could fall even more.

Technical analysis: Netflix shares continue to trade in a bull market

There are some apparent risks when it comes to investing in Netflix shares in January, but as long as the price is above $400, this stock remains in a "buy "zone.

The critical support levels are $450 and $400, $550 and $600 represent the resistance levels. If the price jumps above $550 resistance, it would be a signal to trade Netflix shares, and the next target could be around $600.

On the other side, if the price falls below $400, it would be a firm "sell" signal and probably a trend reversal sign.

Summary

Citigroup raised its price target on Netflix to $580, while Cowen raised its price target on Netflix to $650 on optimism about the company's fiscal fourth quarter. With a $220B market capitalization, this stock is expensive, in my opinion, but as long the price is above $400 support, there is no risk of the bear market. Netflix's future cash flows have already been priced into the valuation of its shares, and if the company generates revenue less than previously estimated, the stock price will be at much lower levels.